In the past few years, western consumers have demanded far more than their economies could possibly supply, creating vast deficits, particularly in the US, the UK and Spain. Asia was a source of much of the supply: creditor nations ran enormous surpluses to meet these western excesses.
Last year, China ran a current account surplus of nearly 10 per cent of output; Japan's was 4 per cent. But, as demand from the conspicuous consumer economies has crumbled, the surplus saver nations have no one to buy their goods. Already bruised by declining investment, the latest growth and inflation projections have been downgraded across the continent.
South Korea, despite a weakened currency, saw exports fall by almost 12 per cent in the last quarter of 2008. In Japan, the west's problems have been exacerbated by the end of the yen carry trade. Over the past year, the currency appreciated by almost a third against the dollar; exports fell by 35 per cent.